Light on a dark art

As the economic crisis deepens, political paranoia over falling European competitiveness is ratcheting up anti-dumping protectionism, a precursor perhaps to more anti-dumping cases. A recent case – the extension in early April of anti-dumping duties on imports of Chinese candles for five years – illustrates just how easily dominant firms can exploit the political environment to further increase their own market power.

The 13-month EU-level investigation, prompted by accusations that foreign rivals were selling in Europe at below-production costs, was marred by two fundamental flaws. First, memory lights and outdoor candles, segments of the market that are dominated by European producers, were excluded from the investigation. In response to com¬plaints about this exclusion, the European Commission replied that the fact that a Community industry may be dominant in this segment is “irrelevant”.

More crucially, anti-dumping authorities decided to ignore the European Commission’s own conclusion that a European paraffin-wax cartel existed: less than six weeks before provisional anti-dumping duties were imposed on imported Chinese candles last November, the competition directorate-general had exposed a European cartel and fined it a record €676 million for fixing prices, thereby artificially inflating the price of EU-produced candles. Anti-dumping authorities reported that a “sharp increase in the purchase price of the main raw material used in the production of candles, paraffin”, had injured European candle producers, but dismissed the information about the cartel. “The increase in the raw material costs and the cartel could not have had a material impact on the economic situation of the Community in¬dustry”, the report contended.

This seems remarkably unlikely and is directly contradicted by the evidence. Furthermore, total exports of European produced candles – namely, to Norway, Switzerland and the US – actually increased by 10% during the investigation period. This picture, of a successful European industry hit by the activities of a European cartel but still able to increase exports, contradicts that of injured producers struggling under the weight of Chinese imports, as this recent decision depicts.

China has in fact been the favoured target of European Commission anti-dumping duties, accounting for 22% of all duties since 1998. As fears are rife that domestic industries are being threatened by cheap Chinese imports, Euro¬pean producers are finding it easy to secure political support for anti-dumping actions against Chinese exporters in particular.

In reality, China is a low-wage country and has relatively low production costs. Its exports are likely to be priced competitively, relative to European products, as a result of comparative advantage rather than any intentional ‘dumping’.

This decision is but the latest of a series that exposes the fallacies of EU anti-dumping decision-making, which is biased strongly in favour of imposing duties even when not justified by the evidence. It also undermines the credibility of EU’s pledges to resist protectionism in order to facilitate global trade.

Lucy Davis is a trade-policy analyst at the European Centre for International Political Economy (ECIPE) in Brussels.

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moura

Regarding this matter, my opinion is very simply,
When Chinese goverment open is internal market to the european market the european make the same it means, the EU must make the some SO PLEASE EU GOVERMENT IMPOSE A SOCIAL TAX TO ALL THE CHINESE PRODUTS BECAUSE THE EUROPEAN ARE FULL OF IMPORT SHEET PRODUTS FROM CHINA AND WE ARE DESTROYING OUR WAY OF LIFE BECAUSE OF THIS SITUATION.China only copy and bad see the example of: textile shoes car tools plastic and the exploration of the labor force and the hipocrisy of our our goverments closing the eyes to the human wrights like children labor force, etc etc !!!
I think is the moment to wake up and impose rullers to this gentelmen or we run the risk of loosing this battle.
We must invest and protetec our industry, because it will be the only solution to leave from crises and give work to milion of people and at some time create money for all. We are been goverment by a lote of imcompetent people. Unfortunaly we are goind to pay and our children a very hight invoice for this incompetency of this persons.